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Bureau Makes Sure Charities Mean Business

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Ross Carter has coined his own term for the elderly. He calls them members of “the trust generation, where your word or your handshake was always good.”

Words are no longer trustworthy, of course, especially over the phone. Every day, Carter, head of the Charity Information Division of the Better Business Bureau Central Virginia, receives calls from people — many of them elderly — wondering if the children’s aid group or firemen’s union they just gave money to was legitimate. Carter wants them to know this beforehand.

For years, the local BBB has reviewed local nonprofits before placing them on its list of approved charities. Organizations don’t have to be on the list to solicit donations, but having their name included may reassure potential donors that they’re legitimate causes.

To be approved, a charity must submit to a 15-part examination, including its annual report, mission, financial status, governance and planned budget. Carter wants to see audited financial reports and scripts for any planned solicitations, to make sure donors aren’t duped. “We get pretty nosy,” he says.

Now, they’re getting even nosier. Following the lead of the national bureau, the local BBB is adding more standards to its approval process. It has traditionally required that 50 percent of a nonprofit’s income must go toward programming expenses, i.e. fulfilling its mission. Soon, the standard will be raised to 65 percent, while the cost of raising money will be limited to 35 cents per dollar.

“I think that their rates are very reasonable, and they should actually strive to be lower,” says Christine Clarke, executive director of the Virginia Breast Cancer Foundation. The United Way, Central Virginia’s largest charity fund-raising organization, requires its partner agencies to keep overhead costs at or below 25 percent. Its own overhead totals 12.5 percent of its budget. Clarke says her organization, which solicits donations every holiday season, typically limits overhead costs to 15 to 23 percent of its budget.

There are exceptions, however, she says. If a nonprofit hosts a high-profile fund-raiser, like a multiday race or a festival, the expenses may rise for that year — and “they should be allowed to say why” when applying for the BBB list, she says.

Other new standards say nonprofits, no matter how small, must also have at least five people on a board of directors that meets at least three times yearly. They can’t have misleading information in solicitations and must ask a donors if they wish their names and addresses to be shared with other organizations.

Local nonprofits will be given the chance to discuss the new BBB standards in July, Carter says. He’ll work with them to refine the criteria, he says, but he won’t cut them any slack: “If you want to meet the standards, you’ve got to get with the program.” —

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